If you’re a VP of sales and you’re thinking about making an investment in sales process or methodology right now it’s probably a stressful decision. For one it takes a lot of time to think through the possibilities of what could be valuable. You want to select something that’s going to squarely hit the mark. It takes a bit of political capital if you’re needing to get financial approval from your boss. It’s stressful because you’re not 100% sure your team will embrace it or reject it. Your credibility as a leader could take a hit.
There’s one question that you should ask yourself to help with the decision: How will it improve how your sales people think, dialogue, plan, and execute around selling?
Take the funnel for instance. It is still popular to assign percentages on funnel stages. Early stage sales opportunities might get a 5% or 10% assigned number. Opportunities that reach a proposal stage might get 50% and one that is in negotiation might get as much as 80% or 90%. But when asked how these percentages help a salesperson sell the answers are usually weak. They don’t promote dialogue. They don’t foster coaching. They don’t help set strategy.
Another example with the funnel is funnel value. We call it TVR, Total Viable Revenue. TVR is the sum of the dollar or euro values of each opportunity that has reached the Commit Funding stage of the customer’s buying process.
With TVR the seller and manager have a powerful piece of information to help the seller plan, organize and prioritize to maximize his or her productivity. TVR is used with the Funnel Audit to determine a 30 day plan every 30 days for working the funnel. But even some of my clients fall back into the habit of cramming the night before the test, completing their Funnel Audit Worksheets the night before. They’ve missed out on the power of the Audit as a planning and prioritizing process. When used properly the Audit helps the seller think with structure about his situation, weigh alternatives, assess the best option, and define the plan.
Finally, another example of using information to help you think and strategize better is when a sales process reveals something important about the sale that you had not considered. Let’s say you had made a few calls on a current customer and thought you had a pretty good idea of the stakeholders involved and their roles in the buying process. But you assumed that someone in purchasing had the financial authority to commit funding based on past experience with the account. In a strategy session with your sales manager she convinces you that your purchasing agent doesn’t have this power and you don’t know which stakeholder does. Now what do you do?
You could do nothing different and proceed as planned. Or you could meet with the purchasing agent and explore this topic of funding. By raising the topic you would learn something at least, such as what else is being considered or timing. But at best you might learn exactly who has that funding authority and even get advice on how to get a meeting with that person.
I haven’t made your decision easy but I hope you put all of your options through the test of how will they help me and my sales team think better, improve dialogue, and ultimately perform the job of selling more effectively.Read Full Post | Make a Comment ( None so far )
One of my clients, a director of sales, gave me solicited input in a meeting I was preparing to facilitate for him and his colleagues and the VP of Sales last year. This was an existing Funnel Principle client looking for ways to leverage the system they installed a few years earlier. “Let’s make sure we talk about sales velocity”, he said.
“Absolutely”, I replied. Then I asked, “If you had better or more information about sales velocity for your region funnel how would you use that information to manage better?”
He replied almost before I finished the question. “I don’t know. But it seems like I should know more about it.”
Metrics like sales velocity are valuable for many reasons. Whether your company has a sophisticated system of metrics, or keeps metrics to a bare minimum, or has no metrics at all you all share a common need to make the information you gather meaningful to your troops. Ultimately, their greatest value is the role they play in changing or reinforcing selling behavior.
Funnel value (we call it TVR, Total Viable Revenue) is probably the most common metric that I hear VPs of Sales say they want to have and provide for their salesforce. I agree it’s a valuable metric but only if it’s acted upon. I continue to see a gap in having that information and in driving change. I see two reasons for this. One is because the users don’t trust the data on their funnels. Therefore, the funnel value has little credibility. Two, there’s a lack of connection between funnel value and actions to run a territory.
TVR is a key leading indicator to the true health of a funnel. It’s all the sales on the funnel that have reached a critical stage of the customer’s buying process called Commit Funding. At this stage the customer has committed funding and possibly significant resources to making a change one way or another.
The best way to connect TVR to actions is to inspect the funnel regularly and use the information to plan, organize and execute. Think ‘lean’ for a second. If a rep’s TVR is in the red, the action plan has to include ways to get it to green. These ways are tied to working specific accounts and opportunities at specific sections of the funnel, namely the non TVR sections. These are the early stage opportunities. You go there first to find more TVR.
An action plan to find more TVR if that’s what the diagnosis suggests is not a loose, airy, feel-good next step kind of thing. It’s specific and therefore accountable.
It’s the sales manager’s job to help the seller define this plan and keep her accountable to it.
Ain’t rocket science. But man it is powerful.
- 3 Important Sales Funnel Metrics (funnelprinciple.com)
I absolutely believe that people, unless coached, never reach their maximum potential. Bob Nardelli, former CEO Home Depot
So how do sales managers help their salespeople reach their maximum potential? By channeling your coaching efforts down three different paths:
- Promoting discovery
- Challenging assumptions
- Facilitating execution
Today’s post explores the path of promoting discovery.
I’ll relate this to my world which might be your world too. I have a teenager learning to drive. In my state the teenager gets her ‘temps’ and has to put in fifty hours behind the wheel with mom and dad. For each sortie my daughter takes my wife and I flip a coin to see who gets the wingman assignment.
With my daughter driving down the road, I sit in the crow’s nest playing the role of lookout boy. Things I have been conditioned to process and assess when I’m driving have suddenly been elevated to orange and red threat level – watch out for people crossing the street at this crosswalk! – don’t assume someone won’t blow through that red light! – watch for black ice there it could be slippery!– look through the turn, not at the turn! – get your hands at 10 and 2 on the wheel! – slow down!
I realize she’s probably retaining 8 ½ % of what I say. At least that’s an improvement over how much she listened before she started driving.
Your salespeople are in a similar, frenetic zone of selling every day. They’re multitasking like mad, managing multiple sales and at different stages of the buying process, trying to log everything into CRM, taking care of issues at key accounts, and more. At this pace they can easily slip from the sales habits they know they should do.
You can help by promoting discovery. Let’s say you have ten minutes at the end of a call with one of your reps. Why not pick a sale she’s working on and go through a ten minute drill to make sure she’s on the right track with her strategy? You could safely begin with the common mistake many salespeople make – selling to too few stakeholders. Ask her to quickly state all of the stakeholders that she’s aware of. If she gives you two you’ve probably found a hole right away. One way to find other stakeholders is to look for bosses and colleagues. If you sell to a VP of Sales who does that person report to? It’s possible the VP will need approval. What’s your plan to sell through the VP in this case? Is there a VP of national accounts on a similar level? Why wouldn’t that person participate in the buying process? Is there a VP of sales in another region that might be looking at the same situation?
Promoting discovery is more effective when you position it as a ‘net’ to catch stuff the busy seller might miss. Don’t make your conversations penal.
Your seller knows that personal motivations drive decision making big time, but has he thought through what the motivation might be right now for a key stakeholder? It’s easy to toss out ‘wants a promotion’ or ‘be seen as a leader’ but the real value is not in knowing the information. It’s in the stakeholder knowing that you know the information. Does her strategy include a plan for that?
Finally, helping your sellers see the health of the funnel is critical. The eye opener though is when you break down the tasks that have to be done to achieve even a short term action plan. Let’s say your seller needs to add $1M of funnel value. That could take weeks or months if the average sale is $50,000. In fact, if he added one sale per week at this level it would take 20 weeks to reach $1M. That’s 4-5 months, which might be too long.
You’re good at promoting discovery I’m sure. Remind yourself to make time to do it.
- For all the Warrior Sales Managers out there… (funnelprinciple.com)
This blog entry is for the warriors out there, the sales managers.
The past several blogs from The Funnel Principle have been directed at salespeople and the opportunity that this time of year gives them to review, renew, and refocus on the upcoming sales year.
I’ve suggested they take a little time to learn from the past year and not let the numbers fool them (good or bad). I’ve suggested they renew or establish good sales funnel habits.
So how do you add value?
You’re their leader. That’s a big responsibility. You have to carrot and stick your way through each day with each of your salespeople. It’s a challenging but potentially very rewarding job.
I’m curious as to where the sales funnel fits into your priorities. Take a second to complete my poll before reading on.
When it comes to the funnel your leadership is mostly around driving process. If you’ve been through other change management programs you know that some people will buy into it, some will resist it, some won’t really care one way or the other. Every program is subject to this kind of response. Because of this you must be the ultimate salesperson every day in selling your team on the need to embrace the tools and processes to help them succeed. And for all of these constituents my advice is to find ways to constantly make the funnel relevant.
One of the ways to make the funnel relevant is to use it within the cycle of the year.
At the beginning of the year funnel focus is on building a healthy funnel steadily. A healthy funnel sets the salesperson up for a successful year and avoids the stress of scrambling to make numbers. Your messaging this time of year is building good habits. Since the results sometime lag the effort be sure to encourage your people to keep up the good work.
At mid year the funnel focus is on how to prepare for the second half push. If their funnels are healthy you want to focus on advancing and winning the higher percentage deals. You also don’t want them to stop building a healthy funnel because you never know what surprises could occur. If the funnel isn’t healthy and there’s still time to reverse that there’s probably a very short window of time available. You’ll have to be very focused on selecting the right accounts and opportunities to develop and eventually win. Finally, this is a good time to remind your sales people about the next year. It’s never too early to be building a healthy funnel for the following year.
In the last couple of months the funnel focus is on winning the few deals that will make their year, and making a hard shift toward next year’s funnel.
Don’t look at this as having to work so hard to convince your people to use the process. This is your job. And your salespeople deserve to be sold.
- 3 Important Sales Funnel Metrics (funnelprinciple.com)
- 3 Important Sales Funnel Metrics (funnelprinciple.wordpress.com)
- The Missing Link in Opportunity Management (funnelprinciple.com)
- Secret Sales Funnel Habit #1 (funnelprinciple.com)
- Use Your Sales Funnel to Drive Deal Reviews (funnelprinciple.com)
Secret Funnel Habit Number 3: Use Your Funnel to Drive Deal Reviews
When your sales funnel is designed correctly, it’s a great tool to set strategies for qualifying and winning sales deals.
Correctly designed funnels have stages that map to the customer’s buying process. What constitutes a correctly designed funnel is a topic all by itself. I’ll avoid that to stay on point – let’s reinforce the good funnel habit of using your funnel for deal reviews. Let me define a deal review and how the funnel can help you do them effectively.
A deal review is a structured conversation about a sale you’re working on. A review is different from a passing, casual deal update. Those probably happen all the time either with you as the sales manager coaching them or as you the salesperson leading the review. Nothing wrong with casual updates, but they don’t yield the same value as a review.
In a review you want to cover key issues and update your strategy as a result of what you’ve discussed. The issues you want to know about usually have to do with the players or stakeholders, your advocates or coaches, competitors and alternatives, and the fit of your solution to the problem.
The key to making these conversations productive is to follow a repeatable agenda for each conversation and to put a limit on the time for the conversation. I recommend you get in, get out and get going in 30 minutes or less if possible.
Try this for your next review:
- What stage of the buying process is this deal at? What tangible evidence do we have that proves it’s there?
- Is this any different from the last time we reviewed the deal? Regardless, why isn’t it different (eg why hasn’t it moved stages, or why did it move stages)
- What’s changed about the way the customer is buying, if anything?
- Are the key stakeholders still participating the way we know them to be participating?
- Are there any new key stakeholders participating? What role are they playing?
- What key missing information is there about about stakeholders, the buying process, or competitors that could create trouble for us?
- When we evaluate the effectiveness of our champions and advocates, what is it that we most need them to help us with?
- What’s the next commitment the customer must make to advance the purchase and which stakeholders will be responsible for making that happen or delaying it?
- What commitment of selling resources seems most appropriate for us to make right now?
The benefits of using your funnel to drive this dialogue are several. One, it keeps the dialogue focused on the customer buying process. Two, it highlights key stakeholders who will likely have most influence on the purchase. Three, it forces you to challenge assumptions, the constant nemesis of setting good strategy. Four, it seeks to identify customer commitment as the next step. And five, it ends with you identifying your commitment moving forward.
Granted, some deals deserve longer, more detailed conversations. Fine. Make those the exception not the rule.Read Full Post | Make a Comment ( 1 so far )
The Completely Uninspiring Yet Totally Powerful Secret to Achieving Sales Goals (otherwise known as re-committing to good sales funnel habits)
This time of year is the time of new year resolutions. Whatever the source of inspiration our minds and bodies are open to, or at least are willing to tolerate, the thought of renewed focus and change.
Usually, these inspirational moments end up with us writing down new goals. We dive head first into goals and plans without determining the process for sticking to them. The problem is you can’t expect the energy from the inspiration to carry you through the 12 month grind. You need a process that will carry you through. It’s like getting a rocket full of astronauts to the moon. The first thing you do isn’t figuring out how to get the rocket there; rather, you determine how you’re going to get it home.
This week I want to help you achieve your sales goals by first helping you commit to the plan and process for making that happen. In other words, lets recommit to good sales funnel habits.
I’ll cover four key topics:
– Managing to Target TVR (Total Viable Revenue)
– Setting monthly funnel goals and actions and bi-weekly updates
– Conducting deal reviews regularly
– Doing monthly Funnel Audits™
Stay tuned for tomorrow’s post: Managing to Target TVR.Read Full Post | Make a Comment ( None so far )
This week’s blog posts are focused on hitting the ground running in 2011. Click here to go back to and start at the beginning of the week. Today’s post wraps the week with two metrics that indicate where leads are coming from, and when in the buying process the lead is discovering you.
Since the global financial crisis that started in late 2008 most salespeople re-evaluated their sources of leads. Their customers and prospects were so slow to buy again that sellers had to rethink how and where to get new business.
This could be the most important part of your review because the source of your leads has likely changed dramatically the past five years. What percent of last year’s leads came from the same sources that leads came from the year before? And what about where leads will come from in the new year? If you don’t know where they will come from then you can only hope that your expensive marketing and selling efforts will magically pay off.
Social networking continues to play a big role in lead generation. Referrals remain the king of high value lead generation since they reduce the cost of sales significantly. Win rates for referrals tend to be higher than for leads coming from other sources. Even trade shows have changed a lot. The web is where many prospects go to begin their search for a new solution. I hope your company is easily findable and has an active presence on the web to produce leads for you. However, without an effective way to process web leads a percentage of those leads lose their value quickly.
Finally, the funnel can help you with one more valuable metric. This one doesn’t have a convenient name so I’ll just describe it this way: the funnel stage at which you are finding your leads.
This has to do with the customer’s buying process. Because of greater access to information and more information available, it’s becoming more common for customers to not seek out salespeople early in the buying process. This means that salespeople are finding leads later. This could have a dramatic effect on funnel management and lead generation. How do you respond? You either find new ways to get involved earlier in the process, or improve your effectiveness at qualifying and winning leads that are already somewhat developed.
There’s a lot of information here to help you quickly review your results and performance from last year. Don’t take a lot of time doing it – you’ll be amazed at what you learn in a short time. This insight will produce a better strategy for tapping the potential of your funnel for 2011.Read Full Post | Make a Comment ( None so far )
This week’s blog entries are related to Hitting the Ground Running in 2011. Click here to go back to and start at the beginning of the week. A good place to begin your review is with these four sales related metrics:
1- Number of sales made
2- Size of sales
3- Percent of sales coming from existing customers versus new customers
4- Mix of sales
Number of sales closed is important for several reasons. Consider some extremes. If you made one sale the entire year then your results were highly vulnerable. If you win it, you’re a hero. If you don’t, you’re a zero. On the other hand when you spread your sales results across many, many sales you could be losing some sales due to a lack of enough focused selling effort on each one. You lightly skip from deal to deal doing just enough to be in the running but not enough to take it across the finish line.
If the number of sales you made this year was markedly different from the number you made the year or two years before then take the time to understand if your approach to the funnel also has to change. If you need a higher number of sales, then your funnel might need more opportunities on it too. If you need fewer sales of a higher dollar value then you might need to improve your qualification of those larger deals.
It’s important to know the typical size of sale you win. If you’re more comfortable winning smaller deals and now you’re being asked to win bigger deals you might want to get coaching on how to make that shift. One of my clients had a sales force that was not equipped to sell seven figure deals. The VP of sales wisely and quickly brought in ‘big deal’ talent that knows how to sell at that level. If you typically win few big deals and now you’ve got to win a higher number of smaller sized deals you might have to prospect more than you normally do to fill your funnel full of smaller sized deals.
Knowing the percent of business coming from existing customers versus new ones can expose important things about how you should work your funnel and find leads. If you’re a ‘farmer’ type seller you might be more comfortable getting incremental business from existing customers. The focus of your lead generation might be selling more stuff to the base of relationships you have, or selling to sister divisions of the division you sell to. On the other hand if you’re a ‘hunter’ type seller you’re probably turning over more sales from year to year and you’re active in filling your funnel with new leads. Now, if you’re a farmer being asked to prospect more, or a hunter being asked to do more account management your funnel management approach will have to change.
Finally, knowing your mix of sales and how it has changed can lead to changes in how you manage your funnel. One of my clients launched a new service that could be sold to existing customers but also could help them get in the door to new customers. Generating sales from the new service will require new approaches to lead generation that might differ between existing and new customers. Sellers that have a low turnover of sales year to year might be surprised at how much prospecting effort is needed to generate opportunities with the new offering.
Tomorrow we’ll look at last year’s results from the perspective of three key metrics, win rate, velocity and push rate.Read Full Post | Make a Comment ( 1 so far )
With another year of selling behind you, the important thing to remember is it’s gone.
I salute you if you had a great year and I’m sorry if your year didn’t turn out as you wanted. For this new year all runners line up at the same starting line once again.
The sales numbers might not lie but they don’t always tell the entire truth either. Therefore, regardless of last year’s results the important thing to do is to learn. I devote this entire week’s blog to last year and helping you learn from it. This week I’ll discuss:
- 4 key sales metrics to understand the raw numbers
- 3 key funnel management metrics that every salesperson must manage to
- 2 key metrics related to lead generation and the customer buying process
As you read through the entries and perform the review remember this:
- Be honest with your assessment and answers.
- Be factual. The better ‘data’ you have about your performance the better your analysis will be.
- Give yourself credit for doing the exercise. The vast majority of sellers don’t do this.
Here are the 9 metrics I’ll cover:
1- Number of sales made
2- Size of sales
3- Percent of sales coming from existing customers versus new customers
4- Mix of sales (if you sell more than one product or service)
5- Win rate
7- Push rate – percent of sales that don’t close within the timeframe you originally state
8- Lead source
9- Funnel stage of discovering the lead
In the next blog post, I’ll tackle the first four.Read Full Post | Make a Comment ( 3 so far )